Is the Sarawak solar project Malaysia’s new 1MDB?

Photo: Firdaus Latif/CC BY 2.0

The former Malaysian prime minister Najib Razak and his wife are at the centre of another graft scandal. Is the net closing in on what was once Malaysia’s most powerful couple? 

Editorial

As investigators crawl further down the 1MDB rabbit hole and expose the full extent of the corruption that typified Najib’s government, it looks increasingly as though 1MDB was the tip of the iceberg.

At the end of that rabbit hole is a kaleidoscopic world where corruption, graft, and nepotism were awash across the upper level of Najib’s government. Najib himself now faces 32 charges, including money laundering, abuse of power, and bribery.

It, therefore, surprised few when Najib was hauled in front of graft investigators again in October after becoming embroiled in another high-profile graft investigation. At the centre of the scandal is a RM1.25 billion (US$240 million) project to bring solar energy to 369 Sarawak schools.

But now the net is expanding. On November 29th, former Education Minister Mahdzir Khalid spent more than eight hours answering questions at the Malaysian Anti-Corruption Commission (MACC). Najib’s wife, Datin Seri Rosmah Mansor, as well as his former special officer, Datuk Rizal Mansor, are both facing graft charges on the same project.

Najib turned a company into a tycoon overnight

In January 2017, Najib personally oversaw a contract awarded to Jepak Holdings in a deal which would see the firm install solar powers on 369 Sarawak schools. The company was expected to supply every school with diesel for their generators while transforming their energy systems to solar hybrid systems at a rate of ten schools a month.

Prior to the deal, a group of 30 local companies were responsible for meeting the schools’ diesel demand. The new deal saw Jepak Holdings become the sole supplier for an agreed price of RM21.8 million (US$5.3 million) per month.

There are questions over the legality of the procurement process

There is evidence to suggest that in awarding the project to Jepak Holdings, the Ministry of Education failed to observe government tendering and procurement laws.

Instead, the Education Minister Mahdzir Khalid wrote to Najib asking for his permission to skip the government’s procurement procedure and award the contract to Jepak Holdings, which Najib duly gave on the 19th of July.

The managing director of Jepak Holdings, Saidi Abang Samsudin, has adamantly denied any wrongdoing. He insisted, “the direct negotiation contract is legal. How could it not be legal?”

However, Malaysian procurement law clearly states that the purchase of any goods and services worth more than RM500,000 (US$120,000) must be completed through a public tender process.

Investigators are exposing Najib’s world of bribes and kickbacks

So why did Najib personally intervene to override the legal procurement process to award a solar installation and diesel supply contract to a company which lists itself as a car rental company?

The cases brought against Rizal Mansor and Rosmah Mansor may offer the answers to this question.

Rizal Mansor, Najib Razak’s former special officer, is being charged with four counts of soliciting and receiving bribes.

The first charge concerns a bribe Rizal solicited for Najib’s wife, Rosmah, from Saidi. The bribe is said to have been worth 15% of the project’s total value, around RM187 million (US$45 million).

The other three charges allege that Rizal accepted bribes for himself and on behalf of Rosmah between March and December 2016.

Rosmah faces two charges surrounding her involvement in the deal. One for soliciting a bribe and one for receiving the money. She is currently out on bail. The next case management date is set for December 10th.

Jepak Holdings also failed to live up to its side of the deal

Beyond the events surrounding the procurement process and the circumstances that led to the Ministry of Education awarding the contract to Jepak Holdings, there were also later concerns over the firm’s inability to deliver the work agreed upon in the contract.

Following the awarding of the contract, some 30 schools were forced to start the new school year in 2017 without power after they did not receive diesel deliveries.

Additionally, by March 2017, several months after the contract was awarded to Jepak Holdings, none of the 369 schools had seen solar panels installed.

Aedy bin Ramli, the procurement head for the Department of Education, complained in a letter dated the 30th of March, that Jepak Holdings was not delivering on the project. Yet, just days later, Najib personally wrote a note to Chief Secretary of the Minister of Education Alias bin Ahmad instructing him to continue paying Jepak “without delay”.

The implications of this are significant. Not only did Najib deliberately ignore government procurement protocol, even once the procurement process was over, but Najib also continued to deliberately misuse public funds by paying for services that were not being carried out.

Is Sarawak Solar the new 1MDB?

Unfortunately, securing convictions against Najib and Rosmah for the Sarawak solar scandal could prove more difficult than the 1MDB case. In the 1MDB case, Najib appears to have funnelled payments to a personal bank account in 2013, leaving a paper trail Najib will be forced to explain. However, Rosmah and Najib used Rizal as a go-between in the case of the Sarawak solar case.

Rosmah Mansor is currently facing two charges, but to secure a conviction, prosecutors will likely need Rizal to testify against her.

Given Rizal is staring down the barrel of a 20-year prison sentence he may be willing to cooperate. There could be a deal on the horizon where Rizal agrees to testify that Rosmah instructed him to negotiate and receive the bribes on her behalf, in exchange for Rizal’s legal immunity.

Alternatively, the prosecution could apply to have the two cases heard together. If the application is successful, the pair would be tried and convicted together.

Given that no arrest was made following the Mahdzir Khalid’s eight-hour interrogation it could mean one of two things for the former Education Minister and his former boss, Najib Razak.

The MACC could have delayed bringing charges against Mahdzir because it needs more evidence to tie him and Najib to the plot. However, there are clearly documents in existence where Najib instructs the Ministry of Education to bypass government procurement procedure and award the contract to Jepak without deliberation.

Therefore, it is more likely that the former Education Minister has already decided to cooperate. He may have escaped arrest for now while the MACC determines exactly what he knows and how he can be of help in the construction of a case against Najib.

The clouds could be gathering for Najib and Rosmah. Their fate could depend on the loyalty of their former colleagues. But stripped of their power and struggling to stay afloat in a sea of graft and corruption charges, what can they offer Mahdzir and Rizal?